I know the gov. doesn’t pay interest, but are they like subsidized loans in the sense that you don’t start paying them back until 6 months post graduation?
Assuming they are at 4% interest, does that mean each year you pay 4% of your principal in interest, so if you have 10k in unsubsidized loans you have to pay $33 a month in interest on it ($400 a year)?
Yes. While in school, you’re in ‘deferment’, which lasts for an extra 6 months after graduation/leaving school, which is called the ‘grace period’.
Important: Your student loan company likely has a plan where they give you an extra break on your interest rate if you consolidate your loans while still ‘in-grace’.
I’ll let someone else handle interest.
My daughter’s loan lets her choose whether to pay the interest while she’s in school, or let it defer until graduation.
Of course by defering, she’s letting it build up.
But is that 4% which is often quoted mean you pay 4% of your outstanding principal in interest each year? If so thats not a ton of money, even with a 10k loan its about $33 a month.
This will give you a good deal more information
http://studentaid.ed.gov/PORTALSWebApp/students/english/studentloans.jsp?tab=funding
Don’t forget that the interest accrues (the interest you don’t pay becomes part of the loan balance). So if you borrow $1,000 at 4% interest and defer payment on it –
The first year you owe $1,040
The second year you owe $1,081
The third year you owe $1,1,125
The fourth year you owe $1,170